The total value of buy-in and buy-out deals completed in the second half of 2023 was just under £28bn, according to Hymans Robertson in its Half Year Risk Transfer Report for H2 2023. This meant that the total for the year to 31 December 2023 was £49.1bn, an all-time high for both the number and the value of transactions.
In the second half of 2023, more than 60% of the bulk annuity market by value resulted from seven deals in excess of £1bn. In total, 226 transactions took place during 2023 with an average size of around £217m, and 130 deals transacted in the second half of the year.
The leading pensions and financial services consultancy analysis found that the value of transactions increased by 75% to £28bn, up from the £15.8bn of transactions in the second half of 2022. It was also a 32% increase on the value of the £21.2bn transactions in the first half of 2023.
Commenting on what the half-year figures mean through 2024, James Mullins, Partner and Head of Risk Transfer Solutions, Hymans Robertson, said: “Record transaction pipelines and activity are set to make 2024 yet another bumper year for the buy-in market. Even though January and February are usually quiet months for the buy-in market, the start of 2024 was a busy time for our risk transfer team, which led on more than £3bn of completed transactions in the first three months of the year.
“Many defined benefit schemes have continued to use their improved funding levels to target whole-scheme buy-ins. As they did in 2023, our expectation is that large transactions are likely to continue to drive market volumes in 2024 and beyond. Over the next few months, we expect around 15 buy-in transactions in the range of £1bn-£2bn to come to market. This £30bn of transactions will join a material flow of sub-£1bn buy-ins and several-billion-pound mega transactions.
“Changing market conditions have increased the capital insurers have to write new business. As the insurers’ back books mature, capital reserves can be freed up and allocated for new transactions.”
Hymans Robertson’s Half Year Risk Transfer Report?for H2 2023 can be read here.
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